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Running Head: AMAZON.COM EVOLVING INTO OFFLINE RETAIL CASE

AMAZON.COM EVOLVING INTO OFFLINE

RETAIL CASE
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Running Head: AMAZON.COM EVOLVING INTO OFFLINE RETAIL CASE

Table of Contents
Introduction......................................................................................................................................3
Question 1........................................................................................................................................3
Question 2........................................................................................................................................4
Question 3........................................................................................................................................4
Question 4........................................................................................................................................4
Question 5........................................................................................................................................4
Question 6........................................................................................................................................4
References........................................................................................................................................5
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Running Head: AMAZON.COM EVOLVING INTO OFFLINE RETAIL CASE
Introduction

Amazon Incorporation started its first B&M books stores in USA by late 2015, and made

huge investments in expanding its business thought-out United States with new projects i.e. it

established Amazon Prime, Amazon Go locations and Amazon Books[ CITATION OhW18 \l

1033 ]. Not only this, a news regarding the acquisition of Whole Foods (an organic and natural

food supermarket) by Amazon was spread out. The case study need to examine the Amazon’s

successfulness in expanding into an offline retail business as the company had always been in the

e-commerce industry and what would be the differentiating point in this B&M retail business,

which will bring competitive advantage for Amazon in the offline retail industry.

Question 1

Amazon has been enjoying its domination in the online retail sector, which is

continuously growing as shown by Exhibit 4. The Amazon’s Chief Executive Officer has

decided to put investments in the offline retail sectors such as Amazon Go and acquisition of

Whole Foods. The offline industry seems attractive for Amazon to put investment in. The

company has already started its investment in the offline businesses by going against the

expectations, such as Amazon Go, Amazon Fresh and Amazon Books.

The industry seems attractive and provides the opportunity to enter into the market,

because 90% of the global population prefers to purchase through offline retail stores. According

to [ CITATION Sta18 \l 1033 ], the e-commerce is approximately 10% of the total $5 trillion

spending over the retail sector. Further the groceries sector has a market of $800 billion, out of

which only 2% is carried through e-commerce channels.

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Running Head: AMAZON.COM EVOLVING INTO OFFLINE RETAIL CASE
In addition, despite purchasing patterns have changed but a lot of people don’t trust

online shopping and they still prefer traditional grocery channels. There are few reasons behind

preference towards local and physical stores such as the experience of visiting a local store is

more enjoyable and few people don’t prefer the return process of online channels. Amazon has

the ability to exploit the offline retail industry, as through beta testing the company has access to

the shoppers’ data and the face to face interaction with the customers, while providing services

according their choices would provide an edge to the company over the retail business.

Question 2

Was the diversification into offline retail risky strategic move? What are the pros and cons?
The diversification is important tool to reduce the risk in the organization. Amazon have

wide range of consumer’s base. Consumers are willing to buy online as well few consumers also

prefer to buy physically. The competitors in the industry i.e. Walmart was planning to go online

so to compete n the market and fulfill the consumers demand it was important for the Amazon to

diversify the business nature and services so that the Amazon can deal with the consumers

preferences and can offer variety of things for the customers. Acquiring the physical store will

increase the consumer’s base because the consumers who prefer physical shopping will also

prefer to buy on the stores because Amazon market impression is positive and consumers prefer

to buy from amazon. But this will add value for Amazon. Further the pros and cons of this

diversification is stated below:

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Running Head: AMAZON.COM EVOLVING INTO OFFLINE RETAIL CASE

Pros:

 Amazon consumer base will increase

 Amazon competitive edge will be sustained and company will be able to offer both

services for the consumers

 Diversification is very important for the company to compete with their major rivals

because they are also going for diversification.

 To maintain the position in the industry it is important for the company to diversify its

services.

Cons:

 Amazon attention will be divided

 Management will be required at high level

 It is possible that the physical stores image can impact the online image of the

company.

 Competition will also increase in the industry.

Question 3

According to the analysis in the second question about the diversification, I would

recommend Amazon to go for the physical store because the cost and benefit analysis depicts

that the going for diversification will generate more profits and it will help the company to

increase the consumers base. When competitors are doing their efforts the company had to move

into the same direction to maintain their position in the industry. Diversity will reduce the risk

for the future for Amazon the company will find a way to maintain the consumers base as well.
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Running Head: AMAZON.COM EVOLVING INTO OFFLINE RETAIL CASE
Offline retail industry expansion will help the consumers to show from the stores and this option

would be feasible for those consumers who prefer the physical buying and food is something that

consumers prefer to buy fresh and physically visiting the stores.

Question 4

Question 5

References

Oh, W.-Y. (2018). Amazon.com: Evolving Into Offline Retail. Harvard Business School.
Retrieved from https://store.hbr.org/product/amazon-com-evolving-into-offline-
retail/W18088
Statt, N. (2018). Why Amazon’s future depends on moving from the internet to the physical
world. The Verge. Com. Retrieved from
https://www.theverge.com/2018/11/2/18049672/amazon-go-offline-retail-future-
competition-walmart-food-drink-grocery-sales
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Running Head: AMAZON.COM EVOLVING INTO OFFLINE RETAIL CASE